Check the Law Before You Check the Box

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A Huge Misconception

The Fair Credit Reporting Act (FCRA) requires that employers use stand-alone Disclosure and Authorization forms. Many employers use applications that are completed online and submitted electronically, but the included disclosure and authorization forms are not actually getting signed with a wet signature or an e-signature. Instead, many employers are using online applications that only include an “I Agree” box that authorizes the background check. The box is typically found at the end of an application, and is required to be completed in order for the potential new hire to apply for the job. This is not compliant with the requirements of the FCRA.

Michaels Stores In Trouble

Since December 2014, the retail store Michaels Stores, Inc. (Michaels) has had two class action lawsuits regarding their background – check process. Michaels was sued for allegedly violating the FCRA by having potential new hires click an “I Agree” box agreeing to the terms and conditions of an online job application that allows for Michaels Stores to obtain a consumer report on an applicant. Companies that use a third party to obtain background checks for the hiring process must comply with the FCRA, one of the many requirements states that employers must give potential new hires a stand-alone disclosure and authorization that includes a clear notice that a consumer report might be obtained. The Disclosure and Authorization form must be part of a separate document informing the potential new hire of the disclosure. Because Michaels used a check box within the application, the plaintiffs argued that this was in violation of the FCRA.

Doing Things The Right Way

The FCRA specifically states that employers are required to provide a clear written Disclosure and Authorization form to all employees, along with a notice that informs them that a consumer report/background check may be obtained for employment purposes. In addition, the FCRA requires that employers obtain signed consent (authorization) of the potential or current employee before performing the background check or obtaining a consumer report. The Disclosure and Authorization forms may be used in either an electronic or paper format. However, whether it is a paper or electronic format, these forms must still be stand-alone documents and obtain a wet signature or an e-signature.

Final Thoughts

Be careful with electronic applications and online Disclosure and Authorization forms. Regardless of the method you choose, be certain you are obtaining an e-signature or a wet signature on both the Disclosure and Authorization forms, and that the forms are separate, stand-alone documents from the application. For more information on how to be compliant with the FCRA when using Disclosure and Authorization forms check out our blog “How to Handle FCRA Electronic Disclosure and Authorization Forms” here. To learn more or if you have any questions please leave a comment or email me at rsanders@validityscreening.com. For more great blogs and content please subscribe to our blogs here.

*The contents of this blog are not legal advice and should not be relied upon as such.